The article gives a financial analysis of Social Security as it applies to me. It also remarks on the personal retirement accounts proposed a few years ago and Chile's reform of its Social Security - like system. (Read more...)Discuss this Article(4 messages)

The "reform" I would like to see would be to make participation in SS entirely voluntary -- anyone could opt out at any time, but they would be permanently barred from rejoining, and would be prohibited from collecting any of the allegedly "accrued benefits" when they retired -- and the fund would have to be run entirely on voluntary contributions, and no money from non-participating taxpayers or from employers.

Of course, this would raise the premiums, because many younger people would drop out right away.

"Social Security" in the US is a complete mess, and there will never be any painless or equitable solution to replace or repair it. Replacement with private savings and pension plans is the most desirable, but at some point the accumulating shortfall is going to catch someone in the neck.

The best option provided so far has been 401k's, which are essentially replacing many pensions funds, and which can follow individuals from job to job - something pensions didn't, and which has led to some abuses.

I commented on it and supported a phase-outhere, by cutting benefits and/or possibly raising the retirement age. For example, a person already receiving benefits would face no cut, a person now age 55 would get a 25% cut, a person now age 45 would get a 50% cut, a person now age 35 would get a 75% cut, and a person now age 25 or less would get nothing. (The full schedule could be more refined.) OASDI taxes could be phased out to track declining total benefit outlays.

I am posting to this old thread because I recently learned that the Social Security Administration has shown the same kind of numbers I did in the article. This page has two links to other pages that show internal rates of return and moneys worth ratios. My article shows "equating interest rates" and "payback" rates, which are conceptually the same. Unless I overlooked it, the Social Security Administration doesn't say what interest rates were used to get their moneys worth ratios.